Job insecurity ‘crisis’ a furphy

According to the ACTU, Australia is facing a “growing crisis of insecure work”. This might come as a bit of a surprise to many. After all, as Treasurer Wayne Swan keeps reminding us, unemployment rates in Australia are at levels that by the standards of the past three decades are relatively low.

Nor does there appear to be any evidence that fear of job loss is on the rise. In February, 17 per cent of a sample of Australian workers told Roy Morgan Research that they thought there was a chance they might become unemployed.

By comparison, when this question was first asked almost 40 years ago, in 1975, 21 per cent reported that their job was not safe.

And the current figure is much less than the proportions recorded during the recessions of the early 1980s (25 per cent) and the early 1990s (32 per cent).

What the ACTU means by insecure work thus has little to do with the likelihood of experiencing unemployment. Instead, for it, insecure work is defined by the nature of the employment arrangement, and is synonymous with casual work, fixed-term contract employment, labour hire and temporary agency work, and even self-employment.

I am sure the self-employed are relieved to hear that it has finally dawned on the union movement that it can be tough running your own business. However, I am equally convinced that the vast majority of the self-employed would request that the ACTU leave them alone.

So let’s focus on employees. Data from the Household, Income and Labour Dynamics in Australia (HILDA) survey reveal that in the second half of 2010, about 32 per cent of all Australian employees were either employed on a casual or fixed-term basis, or were employed through a labour-hire firm or temporary worker agency.

By any yardstick this is a large number, and it is essentially these sorts of numbers that are motivating the ACTU’s “Secure Jobs: Better Future” campaign.

But are we faced with a “growing crisis”? First, the same HILDA survey data suggest that, if anything, the incidence of these forms of employment has been declining in recent years. When the survey was first conducted, in 2001, 34.5 per cent of Australian employees were estimated to be in these non-standard forms of employment.

This fell to just 30.6 per cent in 2008, before rising to 31.9 per cent in 2009 (in the wake of the global financial crisis) and remaining there in 2010. All of the growth in the incidence of non-standard employment thus occurred in earlier decades, and especially the 1980s and 1990s.

If we overlook the fact that the ACTU seems to have been extremely slow in responding to the growth in non-standard employment, it is not obvious that most workers in these jobs are highly disadvantaged relative to workers in permanent jobs.

The ACTU will point to the evidence of its independent inquiry into insecure work (chaired by former deputy prime minister Brian Howe), which “heard from dozens of witnesses”, many of whom recounted the difficulties they faced as a casual or temporary worker.

But I am sure one group they did not hear from was the many casual employees who are doing just fine.

Again the HILDA survey data, which involves the annual collection of data from more than 13,000 Australians, are illuminating.

All employed persons are asked each year to indicate how satisfied they are with their jobs, using a 0 to 10 scale. Most Australians like their jobs, with 59 per cent of employees in 2010 reporting a score of eight or higher (which I am going to describe as a high level of satisfaction). More importantly, the proportion of employees in non-standard jobs who reported high job satisfaction was virtually the same (in fact, at 60 per cent it was slightly higher).

And nor is there any evidence that non-standard employment in Australia has, on average, sizeable adverse effects on other outcomes.

Professor Sue Richardson and her colleagues at the National Institute of Labour Studies, for example, have analysed a measure of mental health and were unable to find any clear evidence that either casual employment or fixed-term contract employment were harmful.

Ultimately, it is not the formal nature of the employment arrangement that matters most for job security. Instead, job security turns critically on how valuable a worker is to employers, which in turn depends on skills.

And at least here there does appear to be some common ground with what the ACTU inquiry is likely to recommend. Most obviously, Brian Howe, in his address made to the National Press Club last week, specifically recognised the increasing importance of investment in worker skills.

Mark Wooden is professorial research fellow, Melbourne Institute of Applied Economic and Social Research, Faculty of Business and Economics, the University of Melbourne.